The credit rating of South Canterbury Finance has been downgraded.
International ratings agency Standard and Poor's cut the South Island lender's long-term rating from B- to CC on Friday. Its short-term rating remains at C.
However, Standard and Poor's is warning further downgrades of both ratings cannot be ruled out.
South Canterbury Finance chief executive Sandy Maier says it is making progress on attracting investors to inject much-needed capital into the business.
Mr Maier says the finance firm expects to make an announcement by the end of August.
South Canterbury Finance is covered by the Government's extended retail deposit guarantee scheme until end of next year.